Imperial College London

Imperial study suggests that internet speed has an impact on property prices


Broadband and property prices

House hunters in London may be willing to pay up to eight per cent above the market price for properties in areas offering very fast internet speeds.

A range of factors have an impact on house prices such as location, amenities and proximity to good schools.  In the first study of its kind, a team of researchers from Imperial College Business School and the London School of Economics and Political Science (LSE) have analysed the value of broadband to English households, looking at the link between property prices and broadband availability.

The statistics compiled over a 15-year period, from 1995-2010, suggest that property prices across the UK increase on average by about 3 per cent when internet speed doubles. While the increase in value is even greater when starting from slow internet connections, an increase from 8 to 24 megabits per second raises is associated with an up to one per cent increase in the property value.

The researchers analysed over one million properties across England to reach their conclusion.  They compared properties that were similar in terms of area, size and access to amenities, but which had different quality internet connections.  They found that houses with good, fast internet access - by virtue of being close to internet supply hubs – had higher prices than similar properties that were further away from those hubs.

According to the researchers, Londoners show a greater willingness than the rest of the country to pay for broadband, reflecting very high usage in the capital city for both work and personal reasons.

The willingness of some house hunters in London to pay a premium for good internet coverage strengthens the case for rollout of high speed broadband in densely populated areas, argue the researchers.

Currently, internet connections are provided via Internet Service Providers (ISPs) such as telecom and cable suppliers but there is growing pressure on governments to intervene and make high speed broadband universal, especially in rural areas.

The European Commission has set a target that by 2020 every European citizen will have access to at least 30 megabits per second of internet connections and at least 50 per cent of households should subscribe to connections above 100 megabits per second.  However, according to the National Audit Office, the UK government’s rollout of superfast broadband to rural areas is about two years behind its original schedule.

Professor Tommaso Valletti, co-author of the report, at imperial College Business School, said:

“Many factors impact on the price of a house such as area, amenities and transportation links.  Our study is the first to look at how broadband can also affect property prices.  This study shows that when it comes to the access to the internet, speed matters.  In this digital age a fast, reliable broadband connection is important; more of us are working from home and using an internet connection to stream TV programmes, make video calls and to browse the web.  The EC has set an ambitious target for all European citizens to have access to high speed connections.  Private provision alone may not be able to supply fast enough connections to people across the whole country. Governments need to intervene so that everyone can have access to high speed internet.”

The team suggest that the findings of the report could be used by governments to help make the case for rolling out high speed broadband.

Read more of the research

See the press release of this article


Maxine Myers

Maxine Myers
Communications Division

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